Petasnick set for next phase

Unlike his previous positions at world-class medical centers, Bill Petasnick wasn’t drawn to Froedtert Hospital in 1993 because of its track record.

It was the hospital’s dysfunctionality that attracted Petasnick back to the Milwaukee area. He saw potential there, and a chance to create something for the community.

Nearly 20 years later, the Wauwatosa hospital has grown into a regional academic medical center that is now part of Froedtert Health, a system of hospitals that includes Community Memorial Hospital, Menomonee Falls, St. Joseph’s Hospital in West Bend, and Froedtert Health Clinics in Waukesha and Washington counties. Froedtert also has an affiliation with the Medical College of Wisconsin in Wauwatosa.

“I feel privileged to be able to lead this organization and hopefully we’ve had an impact on this community,” Petasnick said. “It isn’t about ‘I’ but about the team that was necessary to make this happen.”

Petasnick, 66, will step down July 1 as chief executive officer of Froedtert Health. Catherine Jacobson, president of Froedtert Health, will succeed Petasnick, according to a succession planning process that began 18 months ago.

In addition to growing Froedtert Hospital and Froedtert Health, Petasnick has become recognized as one of the nation’s leading health care executives with more than 30 years of experience. He is a frequent speaker and author on the future of health care and has served as chairman of the American Hospital Association, the Wisconsin Hospital Association and the Council of Teaching Hospitals.

Petasnick’s exit further changes the health care landscape in the Milwaukee-area market. Jon Vice, CEO of Children’s Hospital of Wisconsin, retired in 2009; Ford Titus, CEO of ProHealth Care, Waukesha, retired in 2010; and Leo Brideau, CEO of Columbia St. Mary’s Inc., Milwaukee, took a job with parent company Ascension Health in 2011.

Petasnick spoke to The Business Journal April 10 about competition and health care consolidation in the Milwaukee-area market, the possibility of health care systems becoming for-profit to access capital, and his plans for the future. The following is an edited transcript.

Q. When you arrived at Froedtert, did you think you would spend the rest of your career at the hospital?

A. (Laughs) “No. I left the state in 1981 for North Carolina and sold off the snow blower and all our winter gear. I never expected to come back. I wonder where the years went. When I came here I did not think this was the last stop on the train. But the ability to do all the things we have been able to do, all the challenges, and the ability to travel around, I always came home and took great pride in what we were doing here. All of the trends we were dealing with in some cases, years ahead of time. I look back now and I am surprised so many years have passed. I know when I said to my wife, ‘I have this idea of going to Milwaukee,’ my wife looked at me like ‘Are you kidding?’ But it has been a great community. There is just something about being a part of something and being a part of this community that I have always treasured.”

Q. What is your proudest accomplishment?

A. “The legacy of creating the framework for a comprehensive academic medical center for Froedtert and the Medical College, because everything else follows. The kinds of programs, the kinds of people we were able to recruit in here, the quality of the medical staff, the linkage of the community, the board representation — I don’t think it would have occurred without the transformation.”

Q. Do you have any regrets about how Froedtert/Froedtert Health has grown?

A. “Well, it’s not so much regrets. As CEO you end up making a lot of strategic decisions and some work and some don’t and some you don’t necessarily want to articulate (laughs). I think every CEO looks back at decisions or potentially lost opportunities and there have been a few of those I wish we could have done differently.”

Q. Do you wish Progressive Health, the partnership with Columbia St. Mary’s, which was canceled in 2009, would have come to fruition?

A. “I think that is one of those. I still feel that was the right combination. There were just so many things going on with the environment, the economic crisis, at a time when organizations had to back away from complexity and focus in on more simple actions of managing their costs and all of those other challenges, it just created dynamics where we just couldn’t do it.”

Q. You said recently that regardless of what the Supreme Court does with health care reform, health systems are already undergoing reform. How so, and where do you see this leading?

A. “I think the payment system that we are currently operating under, with or without the act, is changing. That is going to accelerate. Ultimately there is going to be a revised payment mechanism to manage cost. I see the push toward bundled payments, the push toward changes that will dramatically change the focus away from a fee-for-service payment mechanism. That is going to occur with or without any actions on the part of the Supreme Court. I also think the focus around population management and the need to create more effective structures for care coordination to eliminate the fragmentation we have in health care. It wasn’t addressed in the Affordable Care Act, which was more focused on finance and insurance reform. Those changes are critical. We’re dealing with a growing aging population. As us baby boomers enter the arena we’re going to be demanding changes on how care is delivered. All of those are things health systems can have and will continue to work on and have, frankly, nothing to do with what is happening in Washington.”

Q. Do you think we will see even bigger changes, such as not-for-profit health care providers becoming for-profit so they have access to capital?

A. “I think this movement of consolidation and changing the roles of traditional players is going to occur. The issue of access to capital is going to be the key piece. It could drive certain institutions to think about going to for-profit status. I hope it doesn’t go there. I believe personally health care needs to be rooted in the community. I’ve said kiddingly we need to be like the (Green Bay) Packers — the goal of the health systems and hospitals is to be valued as the Packers are, as a community asset. It’s a unique structure, it’s the only one in sports, but that links it to the community. I get concerned if the trend is driven primarily by finance, which will lead you into thinking about a for-profit status, and I worry about that because of the alignment to the community. And that will change the nature of that linkage.”

Q. How has competition between Milwaukee health care systems changed during your tenure, and is this for the better or worse for the market?

A. “I have been a critic of competition for the sake of competition because I have yet to buy the case that competition results in a cost savings to the consumer in health care. On the other hand, competition does improve quality and internal efficiencies. I think around health care there has been a lot of outright competition in Milwaukee. Critics have questioned if it has resulted in improved cost. I have been a critic of that, too. And while people look at the provider side, competition has caused a significant consolidation on the insurance side. When I came here there were 25 different health plans. I’m not sure if that’s good or bad. I’m probably the old buffalo that came out of environments where health care was more collaborative. I do remember the days where we would sit around the table and do more community planning. That joint community planning doesn’t exist under the competitive model.”

Q. How has your work on the national stage changed your thoughts on running Froedtert Health?

A. “It has had a profound influence. Hopefully what I was able to do is bring back to the organization different views and ideas. The whole area of clinical integration, that is now the structure of Quality Health Solutions (a collaborative between Froedtert, Wheaton Franciscan Healthcare, Columbia St. Mary’s and other health care systems) began at the American Hospital Association level where we were concerned about different alignment opportunities. That is an example of something that probably wouldn’t have been on our radar screen that I was able to bring back to this organization.”

Q. Over the last two years, what has kept you up at night when thinking about your job?

A. “I’ve gone through a lot of personal trauma with my wife (Petasnick’s wife, Bobbe, died in March 2010 of breast cancer) and it has created a greater sensitivity to what health care is all about. I think the greatest legacy a leader can leave is to make sure the organization continues to be strong, is on solid footing and moves forward without missing a beat. There is a lot of discussion about transition planning, yet the track record is very mixed. I think time will tell, but the ability to put together an effective transition plan and putting in place strong individuals is probably the greatest point of satisfaction, to know that continues.”

Q. What are your future plans?

A. “Well, I’m trying to take a deep breath here. I’m not intending to jump on a horse and ride off like the Marlboro Man. I want to stay active in the health policy arena. I’m still engaged at the AHA, I am joining as an adviser to an organization that is deep in survey research work — the Harris Interactive Group. I hope to still maintain some presence in Milwaukee and be involved in some community boards. I will be joining the Medical College and doing some teaching around medical policy, and at the same time leaving some time so I can really be an effective grandparent.”